Oriental Insurance Co. Ltd. vs BRAJENDRA SWAROOP AGARWAL

MR. Justice Sunil Kumar Garg, President-This appeal has been filed by the appellant against order dated 3.5.2003 passed by the District Forum, Kota by which the complaint of the respondent was allowed in the manner that the appellant Insurance Company was directed to pay Rs. 2 lakh as amount of expenses incurred by the respondent in respect of medi-claim policy within 90 days failing which the appellant would pay interest @ 12% p.a. and further to pay Rs. 1,000 as amount of costs.

THE necessary facts giving rise to this appeal are as follows : That on 13.4.2000 the respondent complainant had filed a complaint before the District Forum, Kota inter alia stating that he had taken an Insurance Policy No. 243024/48/99/0007 for the period of 12 months w.e.f. 8.2.1999 to 7.2.2000 covering medi claim insurance for himself and his wife Smt. Meeta Agarwal for the sum of Rs. 2,50,000 for the expenses of hospitalization and Rs. 40,000 for domestic hospitalization. It was further stated in the complaint that in the second week of March 1999, the respondent had to go to Bombay where he felt swelling on his cheek on 10.3.1999 and thereafter he took consultation from Dr. Sanjay Gangawal and Dr. Gangwal asked him whether he was taking tobaco or not on which he had stated that he was taking tobaco and the doctor advised him to undergo for Biopsy as he was having some suspicion. THE Deptt. of Pathology of Bombay Hospital and Medical Research Centre had given a report on 10.3.1999 about the biopsy of the respondent in the following manner : "Serial section shows an invasive squamous cell carcinoma. THE keratinized tumor cells are arranged in nests and irregular cords. THE cells possess large, mitotically active, pleomorphic nuclei."

Squamous cell Carcinoma (grade III) of left buccal mucosa." Thus the cancer was detected. THE further case of the respondent was that thereafter he was admitted as an indoor patient in Bombay Hospital on 18.3.1999 and operation was conducted on 23.3.1999 and on 24.3.1999 the following diagnosis was assessed: "MICROSCOPIC AND DIAGNOSIS: Squamous Cell Carcinoma (grade III) left buccal mucosa. : invasive cords, nests and sheets of neoplastic squamous cells : moderate nuclear anaplasia, brisk mitotic activity : tumor invading underlying muscle, fit and reaching skin : cutaneous and mucosal margins free."

THEreafter he was discharged on 31.3.1999 but he had taken the treatment and he was finally discharged on 15.4.1999. THE further case of the respondent was that in getting treatment at Bombay he had to incurred Rs. 2,73,625 in his treatment and for that he had preferred the claim before the Insurance Company, but that claim was repudiated by the Insurance Company through letter dated 28.2.2000 inter alia holding that since the disease of cancer was diagnosed within 30 days from issuance of the policy and since the cancer was of third degree, therefore, the respondent was a patient of cancer prior to issuance of the policy and thus as per terms of the policy in such a case payment was not payable to the respondent. THEreafter the claim was preferred by the respondent before the District Forum. A reply was filed by the appellant Insurance Company on 28.11.2000 and they have taken the same plea which they had taken in the repudiation letter dated 28.2.2000 and further since the disease cancer of the respondent was at the final stage and, therefore, to say that respondent was not having knowledge of the disease of cancer was wrong one on the part of the respondent and he had suppressed that fact at the time of issuance of the policy and further as per terms and condition of exclusion Clause 4.2 of the policy the expenses of hospitalisation would not be payable and thus claim was rightly repudiated. Hence complaint be dismissed. THE District Forum after hearing both the parties allowed the complaint of the complainant respondent through impugned order dated 3.5.2003 in the manner that from the record the fact that the respondent had the knowledge that he was having cancer in his mouth before issuance of the policy had not been found established and, therefore, it was not a case of concealment. Aggrieved from that order this appeal has been filed by the appellant Insurance Company. In this appeal the main contention of the learned Counsel for the appellant is that before issuance of the policy i.e., on 8.2.1999 and since the cancer detected later on of third degree, the respondent was having the knowledge that he was a patient of cancer and that fact was suppressed by him at the time of effecting of the policy. In such a case the appellant company had legal right to repudiate the claim of the respondent complainant on the ground of suppression of material facts and further on the ground of exclusion Clause 4.2 of the insurance policy and thus illegality has been committed by the District Forum in decreeing the claim of the respondent and impugned order be set aside.

On the other hand the learned Counsel appearing for the respondent has supported the imugned order of the learned District Forum.

WE have heard the learned Counsel appearing for the parties and have gone through the entire material available on record. There is no dispute in this case on the point that the respondent had taken the insurance policy bearing No. 243024/48/99/0007 on 8.2.1999 for the period from 8.2.1999 to 7.2.2000 as medi claim policy from the appellant that policy was assured for Rs. 2,50,000 for hospitalisation.

THERE is also no dispute on the point that after issuance of the policy the respondent had gone for biopsy test at Bombay on 10.3.1999 where cancer was detected in his mouth. There is also no dispute on the point that thereafter he was admitted in the Bombay Hospital, Bombay on 18.3.1999 and operation was got conducted on 23.3.1999 and ultimately he was finally discharged on 15.4.1999. There is also no dispute on the point that at the time of issuance of the policy the respondent had not mentioned the fact that he was having cancer in his mouth.

THERE is also no dispute on the point that the respondent had incurred expenses for getting his treatment at Bombay.

THUS in the facts and circumstances just narrated above the question for consideration is whether repudiation of the claim of complainant respondent by the appellant on ground of suppression of material fact and on ground of exclusion Clause 4.2 of the policy was justified or not or whether the findings of the District Forum decreeing the claim of the complainant respondent could be sustained or not. Before proceeding further, it may be stated here that it is the fundamental principle of insurance law that utmost good faith must be observed by the contracting parties and good faith forbids either party from non-disclosure of the facts which the parties known. The insured has a duty to disclose and similarly it is the duty of the Insurance Company and its agents to disclose all material facts in their knowledge since obligation of good faith applies to both equally and in this respect, the decision of the Hon''ble Supreme Court in M/s. Modern Insulators Ltd. v. Oriental Insurance Co., II (2000) SLT 323=I (2000) CPJ 1 (SC)=AIR 2000 SC 1014, may be referred to.

The onus probandi, in cases of fraudulent suppression of material facts rests heavily on party alleging fraud namely the insurer. Furthermore, mere concealment of some facts will not amount to concealment of material facts.

SUPPRESSION of fact must be a conscious operation of the giver of the answer which he knowingly did not disclose. The Hon''ble National Commission in National Insurance Co. Ltd. v. Bipul Kunda, II (2005) CPJ 12 (NC)=2005 CTJ 377 (CP) (NCDRC) has held that for repudiating a claim of an insured, it is for the insurer to show that a statement on a fact, which was material for the policy, had been suppressed by the insured and that statement was fraudulently made by him/her with the knowledge of the falsity of that statement.

BEFORE proceeding further it may be stated here that in terms of Article 12 of the Constitution of India, LIC is "the State" and accordingly, agents of LIC are bound to disclose full information relevant and advantageous to insured. The purpose of creating a Corporation is to serve the interest of consumers. In our considered opinion repudiation of the claim of the respondent by the appellant was not justified and in allowing the claim of the respondent the District Forum had not committed any illegality because of the following reasons : (i) There is not a single document in file which could have revealed the fact that before 8.2.1999 (the date of issuance of the policy) the respondent might have taken any treatment for the chhala in the left side of cheek and there is no other record showing that for that he had ever been admitted in any hospital for getting the treatment simply because the respondent was having chhala in his mouth it could not be presumed that he was having the knowledge of cancer.

(ii) Cancer means, cancers, of which there are an estimated 200 different kinds, have the properties of uncontrolled growth of cells derived from normal tissues and of being able to kill the host by the spread of cells from the site of origin to distant sites or by local spread. Cancers that arise in epithelial tissues are called carcinomas; and those from mesenchymal tissues, are classed as sarcomas. Leukemias are also classed as malignant growths.

The diagnosis of cancer is made by various means, the most important being biopsy, q.v.; use of devices for visualization of hollow organs; reontgenography including computerized axial tomography (CAT); mammography; ultrasound, cytology such as the Papanicolaou test,q.v.; and palpation for lumps. Some of these techniques and devices will demonstrate an increase in the size or change in the shape of an organ, but such alteration may be due to either a benign or malignant growth. There are various cancer stating systems to help delineate the extent and prognosis of tumors. An example of one of these is the tumor, node, metastatsis system (TNM). Numbers are added to each category to indicate degree of dissemination. Since in the present case the test of biopsy was conducted on the respondent for the first time at Bombay on 10.3.1999, therefore, the findings of the District Forum that before that the respondent was not having any knowledge of having cancer are liable to be confirmed one and, therefore, the findings recorded by the District Forum further that it was not a case of misstatement by the respondent are also liable to be confirmed one.

SO far as the terms of exclusion Clause 4.2 of the policy are concerned it may be stated here that such policies are issued later on and not at the time when declaration form of the insured was filled in up by the insurer.

THUS the respondent might have a trouble in the mouth but that trouble could not be treated in the manner that he was having the knowledge that he was a patient of cancer before 8.2.1999. Further since the policy in which Clause 4.2 is incorporated was not issued at the time of proposal and filling in up the declaration form, therefore, the respondent is not bound by the terms and conditions incorporated in the policy as the appellant being a State was bound to disclose full information at the time of filling in up the declaration form and since this aspect was missing in this case, therefore, exclusion clause would not come to help to the appellant. For the reasons, we are in agreement with the findings recorded by the District Forum and it is held that the claim of the respondent was wrongly repudiated by the appellant through letter dated 28.2.2000 and thus in doing so the appellant had acted in arbitrary manner and it would amount to deficiency in rendering services to the respondent and the findings recorded by the District Forum are liable to be confirmed one as they are based on correct appreciation of the entire materials and evidence available on record and they do not suffer from any basic infirmity, illegality or perversity and hence, this appeal deserves to be dismissed. Accordingly, the appeal filed by the appellant is dismissed. Appeal dismissed.